Researching home prices and answering the “buy or build” question has become easier than ever with a plethora of apps and products available. However, the average home building price calculator usually underperforms in one key aspect: accuracy. That’s because most typically use cost per square foot to produce their figures, and these can fall several thousand dollars short of the final price. Home-Cost illustrates why cost per square foot estimates don’t work and how determining potential home construction costs by zip code is a superior method.
1. Estimation Methods Aren’t Consistent
The techniques used to estimate the price of a build based on cost per square foot can vary greatly from builder to builder. One common approach is to divide the total cost by the amount of livable square feet. Even so, this method can result in a higher price per square foot if you opt for a porch or garage that’s larger than average.
2. It Leaves Out Critical Expenses
When you get an estimate based on the projected cost per square foot, many items that contribute to the final price may have been excluded. These figures frequently don’t include excavation and site work or consider expenses associated with constructing basements, garages, porches or bonus spaces. Finally, the inclusion of premium construction materials, upgraded appliances and other top-shelf conveniences can push up the total and cause the project to go over budget.
3. It Doesn’t Factor in Regional Differences
Another problem with cost per square pricing is that it’s based loosely on averages, which don’t account for regional pricing variations. Consider how labor rates can vary drastically between locations. Meanwhile, the cost of materials is affected by local availability and any shipping and storage fees. As building and zone laws differ between jurisdictions, these also potentially drive how much a builder spends on compliance.
4. You Can’t Design to Your Budget
You want a home that’s crafted to meet the needs of your family, but you’re also realistic when it comes to your budget. Cost per square foot estimates are a shot in the dark at best, since they don’t account for many aspects of construction. Home-Cost’s survey of build projects revealed that most go over budget by around 30 percent. For an initial bid of $250,000, that translates to an extra $77,500 and brings the final price to $327,500. Whether you’re financing the project or funding with existing resources, that’s a lot of extra money to pay. Yet with a zip code estimation tool, you can scale your build to fit within your desired price range.
Home-Cost: The Better Solution
The bottom line? The best that a cost per square foot estimate can offer is a ballpark figure. Home building cost by zip code is a far more accurate approach and factors in variables often missing from per square foot methods. Home-Cost’s innovative estimator app provides real-time feedback as you change designs, materials and options, giving you the most precise approximation of your dream house’s construction costs. To learn more or get your questions answered, simply complete our online form or call (800) 646-0350.